This is my opinion but backed up by facts, so here goes: The GS...

This is my opinion but backed up by facts, so here goes:

The GS analyst sounds so inexperienced because:

a) How do people trade cyclicals? You buy when the PE multiple is high and sell when the PE multiple is low. Why? Because you buy when earnings are depressed and sell when things are on fire.

b) GS's valuation method suggests you sell know when capex is up/depreciation is elevated, and then buy when the cash is pouring in?? This is the exact opposite of sound investing. You should be selling when everyone can see the numbers.

c) This capex is currently being a sunk i.e. a sunk cost. That's a bad thing???

d) People should value based on future cash flows. That's about as stupid as saying hey, dump the toll road infrastructure stock because they are constructing and buy at year 20 when the depreciation is low. Some people avoid capex humps in infrastructure, but when the capex is being sunk and the pendulum shifts towards cash generation, you typically see a big rally in the share price.

TPG Telecom is in that situation as it will launch it's mobile business in a few months time i.e. cash coming in, capex sunk.


It's no wonder research is being carved out of trading. You can't make a living out of this kind of b.s.